UPDATE 1-Rio Tinto says talks with Mongolia ongoing, productive

SANTIAGO, April 9 (Reuters) - Rio Tinto Plc
is having productive talks with the Mongolian government over
the investment agreement for its Oyu Tolgoi project in the
Central Asian nation, the chief executive of the global miner's
copper division said on Tuesday.

Rio and Mongolia are at loggerheads over the future of one
of the world's largest untapped copper deposits just as the mine
ramps up output and the Rio subsidiary that owns it tries to
line up $4 billion for the next stage of development.

The mine is operating under a temporary budget after the two
sides failed to agree on a deal last month, having disagreed
over taxes and rising costs that Mongolia fears will erode
prospective earnings.

"While there are complex issues that need to be resolved,
constructive progress is being made," said Jean-Sebastien
Jacques, speaking as part of the CESCO/CRU copper conference in
Santiago. "We continue to have productive discussions with the
government on a range of issues."

The mine is due to start selling in June and could make up a
third of Mongolia's economy by 2020, producing 425,000 tonnes of
copper and 460,000 ounces of gold a year.

Jacques said on Tuesday that the mine is on track to reach
commercial production during the summer.

Rio Tinto and Oyu Tolgoi owner Turquoise Hill Resources
, formerly known as Ivanhoe Mines, signed an investment
agreement with Mongolia in 2009. The government stood by the
deal despite calls from politicians to amend it.

Shares of Turquoise Hill rose 6.5 percent to C$6.56 on
Tuesday morning on the Toronto Stock Exchange. The stock is down
nearly 17 percent so far this year.

Rio's London-listed shares closed up almost 5 percent on
Tuesday, but are down more than 10 percent so far this year.